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The UK and the New Reality of Gender Pay Equity



I recently attended a seminar in London on the new mandatory reporting on gender pay.  The event was co-sponsored by Huntswood, a UK based specialist resourcing and consulting firm that focuses on governance, risk and compliance and Women on Boards UK.  The statistics were pretty amazing and alarming, and while the data and insights are from UK organisations, I am sure that the underlying results would be the same in most of the world.

First, what is the UK Gender Pay Gap legislation? 

Pay gap reporting is part of the Equity Act 2010 and requires by the 31st of March 2018 for Government organisations or the 4th of April 2018 for charities and commercial companies, all institutions with 250 employees or more to report, via the government website, their gender pay gap.

The mandatory gender pay gap reporting - From 2017, any organisation that has 250 or more employees must publish and report specific figures about their gender pay gap.  The gender pay gap is the difference between the average earnings of men and women, expressed relative to men’s earnings. For example, ‘women earn 15% less than men per hour’. Employers must both - publish their gender pay gap data and a written statement on their public-facing website and report their data to government online - using the gender pay gap reporting service. (See HERE for more information)

 

As we all know what gets measured gets done, and the fact that the UK government has made this: -

1.  mandatory,

2.  consistent (e.g. everyone has to calculate in the same manner), 

3.  visible (it is published on the company’s website and in the government reporting tool), and

4.  penalties apply if the organisation does not complete the filings on time.

There is an excellent chance that this will make a difference, as the list above is best practices of any KPI or behavioural change system anyone would want to implement.

And after gathering the information and filling in the mandatory government format, each company must report: -

  • mean gender pay gap in hourly pay
  • median gender pay gap in hourly pay
  • mean bonus gender pay gap
  • the median bonus gender pay gap
  • the proportion of males and females receiving a bonus payment
  • percentage of the men and women in each pay quartile

The results

As of the end of September, only 83 companies have filled in the form and reported.  The number of businesses that have to complete this widely varies depending on your source.  There are mentions of circa 8000 companies and then there is the data extrapolated from the Bureau of Statistics.

There are 5.5m companies in the UK of which more than 99% of them have less than 250 employees (UK Bureau of Statistics 2016).  This means that there could be up to 55k (1% of 5.5m) commercial organisations that need to complete the gender pay gap report along with the charities, government entities, academic and similar institutions that employ greater than 250 people.   

 

Whether it is 8k or 55k the speed in which organisations are completing this process has been glacial.  This could be for several reasons such as they don’t have the data or the results don’t look good.  If you are a FTSE listed organisation, and the data is not telling the story the board, and other stakeholders want to see, you need time to get your media sound bites, action plan and internal communication agreed before posting statistics that could cause unfavourable media or employee attention.

The other sad but interesting result from the 80 plus organisations that have completed their gender pay gap report was the extrapolation of the data.  If all companies looked like the first 80 and the rate of improvement is the same as it has been in the past, then it will take greater than 60 years to close the gender pay gap.  That means my generation and the children of my generation will not see gender pay equity, but potentially we might get there by our grandchildren’s generation.

The individual results are available via the government website.  For example, Capgemini UK PLC has published their results, and it shows: -

1.  women are paid 19.4% less than men per hour (the mean difference)

2.  Regarding the gender mix at the five levels of reporting, it shows that Capgemini is a very male-dominated organisation with men making up 66% of the lower quartile, 72% of the lower middle, 77% of the upper middle and 85% of the top.

3.  Regarding bonus pay, the people who receive it are pretty evenly split between men and women (57% of the men and 54% of the women).  Women do get materially less bonus pay than men.  The women at Capgemini get 37% less bonus pay than men.  This is most likely related to the lack of women at the senior levels.

Capgemini recognises that they need to increase the number of women at senior levels and they have provided their point of view on the pay gap and the actions they are taking.  You can download their report HERE.  While their pay gap is smaller than others (19.4%) the mix of women to men, at all levels of their organisation including the board, is their focus.

If you would like to check out the results of your favourite organisation you can go HERE and put in their name.  A hint to help with the search, as it is not an intuitive; you have to spell the company exactly as it was loaded.  For example, to find Capgemini you needed to include the UK PLC.

What next?

The government is not telling organisations that they have to close the gender pay gap, the words that are used is “this reporting will encourage”.  They are providing suggestions for improvements and what might be best practice, but at the end of the day, if a company choose not to close the gap, as of today, there are no ramifications from the government.  Over time I can see this as being a real differentiator in the continued challenge of attracting and retaining the best talent.  The data published will help potential employees make an informed decision around which organisation could be best to work.  It could also inform shareholders.  Why would you invest in a company that does not want to close the gender pay gap?  And for the government organisations, it can provide a focus for where intervention or changes in leadership may be required to achieve improvement. 

The UK government’s initiative around gender pay gap is to be applauded.  Hopefully, the results are used to help transform behaviour and reduce the lead time to equity from 62 years to something considerably less.

Mary Sue Rogers

Posted On : 11-10-17

Commented by:  msrogers

Michaela - yes it is a legal requirement. One of the URL's at the top gives you the complete legislation if you are interested. Thanks for the comment

Posted On : 01-11-17

Commented by:  michaela walsh

is this truly a fact - are companies legally responsible? if so my congrats to the Brits.

Posted On : 01-11-17

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